Should You Buy Nvidia Stock After Its Blowout Feb. 25 Earnings Report?
Should You Buy Nvidia Stock After Its Blowout Feb. 25 Earnings Report?
Daniel Foelber, The Motley FoolTue, March 3, 2026 at 1:05 PM UTC
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Key Points -
Nvidia continues to grow earnings at an unprecedented pace.
Nvidia's key customers are spending even more on AI.
Competition hasn't eroded Nvidia's margins.
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On Feb. 25, Nvidia (NASDAQ: NVDA) delivered its highly anticipated fourth-quarter fiscal 2026 earnings report. Despite sky-high expectations, Nvidia continues to produce impeccable results quarter after quarter. But with the stock up so much in just a few years, some investors may be concerned that Nvidia is priced for perfection.
Let's contextualize Nvidia's record year and potential to see if the growth stock is still a buy now.
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Nvidia logo on a sign outside of Nvidia’s headquarters.
Image source: Nvidia.
Nvidia's record year
Nvidia's stock price has soared 724% in just four years -- crushing the S&P 500, Nasdaq Composite, and tech sector by a wide margin. At first glance, it looks like a bubble on the brink of bursting. But Nvidia's results back up the stock's move.
In just four years, Nvidia has gone from less than $5 billion in net income to $120.1 billion -- making it the second most profitable company in the world, behind Alphabet. Its revenue and net income have grown faster than its stock price, and Nvidia is still converting over $0.55 of every dollar in sales into after-tax net income.
Metric (GAAP)
Fiscal 2023
Fiscal 2024
Fiscal 2025
Fiscal 2026
Revenue
$27 billion
$60.9 billion
$130.5 billion
$215.9 billion
Gross margin
56.9%
72.7%
75%
71.1%
Operating margin
15.6%
53.2%
62.5%
60.6%
Net income
$4.4 billion
$29.8 billion
$72.9 billion
$120.1 billion
Net profit margin
16.3%
48.9%
55.8%
55.6%
Data source: Nvidia. GAAP = generally accepted accounting principles.
Thanks to strong demand for its Blackwell and Rubin chips, Nvidia is guiding for $78 billion in first-quarter fiscal 2027 revenue and 75% GAAP gross margin. That would be a 14.5% quarter-over-quarter increase and a staggering 76.9% increase from the first quarter of fiscal 2026.
A concentrated customer base
Nvidia's results and near-term guidance are nothing short of extraordinary. However, some investors may be concerned that Nvidia is overly reliant on just a handful of customers -- making it prone to a cyclical downturn in artificial intelligence (AI) spending.
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On its Feb. 25 earnings call, Nvidia said that the top five cloud providers and hyperscalers collectively account for a little over 50% of its data center revenue. But analyst expectations for 2025 capital expenditures from these customers are up nearly $120 billion since the start of 2026, approaching $700 billion in total. These five customers are probably Amazon, Microsoft, Alphabet, Meta Platforms, and Oracle.
So while it's true that Nvidia relies on a handful of customers, the business cycle is still in full-throttle expansion mode and showing no signs of a downturn. It's also worth noting that Nvidia is doing increasingly more business with Anthropic, OpenAI, and Groq, including a $10 billion investment in Anthropic and a potential $30 billion investment in OpenAI. So as those companies grow, Nvidia could become less dependent on the current "big five."
Nvidia is a buy
Nvidia's stock price didn't react much to its latest earnings print. But the results and management commentary on the earnings call were music to the ears of long-term investors.
Nvidia remains a high-margin cash cow that can afford to aggressively invest in product innovation to capture the bulk of next-generation AI spending -- giving it a long runway for future earnings growth.
Add it all up and Nvidia remains a high conviction buy and a foundational AI stock to build a portfolio around.
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Daniel Foelber has positions in Nvidia and Oracle and has the following options: short March 2026 $240 calls on Oracle. The Motley Fool has positions in and recommends Alphabet, Amazon, Meta Platforms, Microsoft, Nvidia, and Oracle. The Motley Fool has a disclosure policy.
Source: “AOL Money”
